Know your banking needs before establishing a long-term financial relationship

Published April 3rd, 2016 - 12:18 GMT
When you’re selecting your bank, should not compromise on customer service and convenience for a better rate.  (File photo)
When you’re selecting your bank, should not compromise on customer service and convenience for a better rate. (File photo)

People often pick a bank based on convenience or recommendation, and stick with it. In this process, they somehow forget or overlook that banks are different. Not only do they provide different levels of customer service, they also have different products, rates and features that may make one much more attractive than the other based on individual needs.

If you fall in the trap of convenience of having all your banking needs met in one place, you may be missing out on lower rates or better products — or even more convenience. Shopping around from time to time may also lead you to a better deal on your banking experience, especially when you’re looking for a long-term financing relationship in the process.

The starting point is to understand that the differences can be significant, and what can be described as a standard fee or policy in one place may not be the same at another. That is why while you may be all settled in your relationship with your bank, try to check out other options. Check out rates, fees and costs of financing. If you walk into a bank branch as a potential customer, you may be surprised at how much information you will be able to get in a bid to get your business.

So if you have doubts about what your bank is providing or you’re shopping around for a big-item financing, here are some points that you should explore in a meeting with a new bank or in your research.


There is nothing like a flat interest rate for everyone. When you’re financing a big item like a car, home or taking a large personal loan, bankers will look at several factors that eventually determine your rate. These items may include your employment status, any credit history, your income and the loan amount. Sophisticated lenders may go further into analysing your ability to repay.

All of these factors — and more — determine what rate you will be able to get. If you seem to be high-risk in terms of your ability to repay the loan, you probably will get a higher rate as the lender tries to recapture the loan amount quickly — and vice versa. The point is: These formulas and factors are different from one lender to another, and if you shop around you may get better rates on the same deal.


These are all the fine-print issues that you can easily overlook initially, but eventually come to haunt you. These terms are typically described by bank representatives as standard, and sort of unnegotiable. But if you shop around, you may find that what’s standard with one lender isn’t with another. For example, the costs of the service can differ significantly and so are the charges and penalties associated with matters such as prepayment, missed payments, etc.

So while you may be pleased with getting a lower rate from one lender, you don’t really get the full picture of your deal until you explore these terms. Think of the likelihood of having these terms apply. For many people, these may seem like a far-fetched concept, but in reality there are there for a reason and they can increase the cost of your loan substantially if you end up using them.


Convenience isn’t always in having all of your transactions done with one bank. Banks may facilitate your business drastically by offering better technology for their online and phone banking, giving you peace of mind by providing better fraud detection, etc. So when you’re selecting your bank, don’t overlook all of these factors. In fact, you should not compromise on customer service and convenience for a better rate. Your goal should be to have the best of both worlds.

Ease is also demonstrated in the amount of support you get through the process. When you feel that the bank representative is on your side, trying to get you the best deal possible on your rate and terms, that should be indication that you’re in the right place.

By Rania Oteify


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